How FG Earned $1.2bn From Telecom Licences – Obasanjo

The Federal Government generated around $1.2 billion in telecom license fees from major operators such as MTN, Globacom, Econet (now Airtel), and Etisalat (now 9mobile) during the early days of mobile technology in Nigeria.

These license fees played a vital role in establishing the telecom industry in 2000, a sector crucial to Nigeria’s economy.

Former President Olusegun Obasanjo revealed this at the book launch and exaugural lecture of former Editor of The PUNCH, Dayo Oketola, in Lagos on Tuesday.

He revealed that his administration rejected attempts to sell telecom licenses for a mere $3m, instead ensuring they were sold at their true value of $280m each to MTN, Glo, and Econet.

Notably, Etisalat, the last entrant into the telecom sector, paid a substantial $450m for its license. This strategic move generated a total of $1.2bn to the Federal Government through the Nigerian Communications Commission.

“When the first three mobile telecom companies came in, they were offered licenses. The cost of one of these licenses was $280m, but soon, the same license was going to be offered for just $3m by some individuals in the previous government who wanted to give out these licenses to their friends for just $3m,” Obasanjo said.

He said while these investments have driven significant progress, creating the right conditions remains essential for attracting future investments and sustaining sector growth.

“There are still opportunities today for Nigeria to attract investments, but the right conditions need to be created for that money to come in again,” he stated.

MTN, a South African firm, began operations in Nigeria in August 2001 and quickly became a market leader. Globacom entered the market in 2003, introducing a pioneering per-second billing model that compelled MTN and Econet to follow suit.

Econet Wireless Nigeria, launched in 2000, initiated commercial GSM services on August 5, 2001. In 2007, Emerging Markets Telecommunications Service, trading as Etisalat, joined the Nigerian telecom market.

Speaking further, he acknowledged that the competition among operators (MTN, Econet, Glo) significantly shaped the sector.

“We achieved competition. The three of them were competing. And of course, the one who had the upper hand in terms of spread, I think, was MTN, followed by Glo and then there was Econet. Econet made the heart quarrel among themselves a bit, but eventually, they sorted themselves out. Well, when they came, they came last,” the ex-president stated.

Before the advent of mobile telephony in Nigeria around 2000, landlines were the primary means of communication. During this period, landlines were limited and often considered a luxury, accessible mainly to the wealthy.

The former head of state recounted how Nigerians faced considerable challenges with limited infrastructure, securing fewer than 500,000 phone lines despite extensive investments.

“The story of communication telecommunication, particularly mobile communication telecommunication, was a very interesting one, because before mobile telecommunication, we’d done a lot of things.

“We spent a lot of money. We have had companies we have invited from America, from France, even from Britain, and we did not get more than 500,000 lines with all that we have done, and people have to queue at the telephone,” Obasanjo stated.